Why not taking a lucrative layoff package is brain-dead stupid

Years ago I argued that layoff packages should be avoided because of the opportunities a savvy insider could have in a firm that was going to suddenly be short a lot of savvy insiders. It was more a bird-in-the-hand kind of argument given you’d have no idea what job you’d eventually end up with. However, after reviewing the outcome of programs like this over the years I can, with some authority, say that is no longer a sustainable position. In fact, in reviewing some recent programs I can generally say that not taking a lucrative package is brain-dead stupid in most cases. Or, put more bluntly, if your company is foolish enough to do a layoff badly and if they are willing to pay to send you someplace that is managed better, saying “yes” should be a no-brainer.

My aha moment

I realized that my prior position was untenable when talking to a number of employees who were leaving or had left a large dominant tech firm currently executing a massive layoff. They shared an observation: They said that because the layoff package was so lucrative managers had determined that anyone who didn’t take it should be managed out of the company. Reasons ranged from the perception that these employees were low quality and likely stayed because they couldn’t find another job to them being too stupid to leave.

It had never occurred to me that managers would equate an unwillingness to take a package as a sign that an employee needed to go. So your choice isn’t going with a package or staying it is going with or without a package (because, let me tell you, if they manage you out you aren’t getting a lucrative package).

HPE example

You may have seen the recent news that HPE is being sued by a number of employees for age discrimination. This is allegedly because they have a policy that requires that 75 percent of the new hires be relatively inexperienced. Effectively they want to hire mostly young cheap labor. That means that three out of four hires, some of which will be to backfill more experienced people that were laid off, won’t initially have the skills to do their new jobs. Sadly, as stupid as this is, it is also not uncommon.

Way too many CEOs, and boards, that seem to think most jobs can be done by most anyone tend to focus so much on salary containment they kill the company off over time. It doesn’t matter how good you are or how high you are; you’ll never be able to overcome that level of idiocy. Basically, this means they don’t value your skills and you’d be vastly better off, if you have marketable skills, going someplace else where you and your skills are valued.

Conceptually

If you think about how most of these layoffs seem to be done, giving folks a large package. Usually, they are asked to leave because they may have had one bad review in the last three years, from this you can conclude that the firm is being poorly managed. The reality is that smart people who are well connected will figure out the code and either intentionally get a bad review by slacking off (and once someone starts slacking off it is really hard to stop) or they’ll go to their manager and ask for a bad review in order to get the package.

Most managers I’ve known will actually help an employee who would like to take the package get it. Why? Because they know that if that employee doesn’t get the package they’ll be resentful and go from being an asset to a problem. So the very concept of this kind of a program is flawed, it will eliminate the most marketable employees and any that are left will likely go from being top performers to disgruntled problems. And even if it isn’t you, who wants to stay in firm where most of the folks that are left couldn’t figure out the code or are pissed off because they think they’ve been mistreated?

Given the firm is likely already in trouble at this point and wasn’t able to perform with a lot more people on board, how do you think the future is going to go with the top performers largely gone or pissed off?

The FAPOSECOND

When I was at IBM decades ago they put in place what was then called a FAP, or Financial Assistance Package. It was very lucrative in that it included one-month salary for every year of service and a bridge on covered medical till retirement. We called the period between being told you were eligible for the FAP and saying yes the FAPOSECOND. This was back when there were full pensions so anyone within 5 years of pension ran screaming out the door and there was at least one executive that figured out how to game the system and effectively got a pension that was 150 percent of his salary.

Sadly, I was never offered a package. However, if I could go back in time I would have gamed the system and taken the money and run. Learn from my mistakes, when a good package emerges, talk to your manager, and take the money and run! You’ll come to regret it if you don’t.

So, if given a choice during a layoff should you take a lucrative package? Pretty much every time. Run like the rest of your career depended on it. (Because it does).

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